The term “segment” is used for surfaces of a body. In your context that simply means “shell element”.
For a standard penalty contact (SOFT=0/1) “nodes” are checked, if they penetrate an “element/segment”.
So in your case the nodes of the “shell edge” are contacting the wall “elements/segments”.
The above formula is using the properties of the “segment” that is in contact with a “node”.
For further information on that please refer to the LS-DYNA theory manual, like the section shown below:
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